When General Motors and Chrysler took money from the U.S. government to prevent being consigned to history, the two storied domestic automakers had no choice but to put their fates in Uncle Sam's hands. After two very brief bankruptcies and billions in bailout cash, America's favorite bearded relative is looking to take its own pound of flesh.
Automotive News is reporting that the Obama administration and the Treasury Department are planning to announce pay cuts of up to 90% for the top 25 earners at GM, Chrysler, GMAC and Chrysler Financial. U.S. pay czar Kenneth Feinberg reportedly negotiated the pay arrangements with the companies during four months of negotiations.
The reported cuts will put a deep gash into the pay of executives like Fritz Henderson, who reportedly earned $1.3 million last year. There is no word at this time whether the bonuses of top auto execs will also be trimmed. GM and Chrysler aren't the only TARP recipients to get a big-time pay cut either, as top execs from AIG, Bank of America and Citigroup are also going to experience the economic downturn in a very real way. According to AN sources, pay cuts will average around 50% between the seven companies. The AN source claims that AIG execs, for example, will not receive compensation that surpasses $200,000. Companies that have already paid back TARP money, however, will not be affected by the government-mandated pay cuts.
[Source: Automotive News, sub. req'd | Source photo by JUNG YEON-JE/AFP/Getty]